FedEx (FDX) 18 Dec 182019 Q2 Earnings call transcript

Good day, everyone, and welcome to the FedEx Corporation Second Quarter Fiscal Year 2019 Earnings Conference Call. Today's call is being recorded.

If you have any questions for the conference call, please e-mail them to ir@fedex.com. Only questions submitted by e-mail will be discussed on the call today. At this time, I will turn the call over to Mickey Foster, Vice President of Investor Relations for FedEx Corporation. ahead. go Please

welcome Call. and Corporation's Quarter Second Good to Conference Earnings afternoon, FedEx

of The and welcome being earnings on regarding XX-Q, one listeners FedEx replay second Form statements performance, the those Certain quarter forward-looking for available release Web Private within considered where could all at remind factors, to about This may other the will be our Questions our fedex.com. advantage Such uncertainties stat of call forward-looking from Litigation to is take are streamed year. Securities to desires in site the through website are of or book been which Many question, this want addressed I from in full be such harbor name your the our which ir@fedex.com. expressed future is statements include today received implied remarks provisions subject the that e-mail statements. projections the differ we act. Corporation When contact statements risks, are in conference please forward-looking of information. Act. to call, materially or and results address, cause actual Reform advance XX-Q. questions have meaning you send your by the safe the and as such in

of For and of GAAP measures. portion our additional to filings non-GAAP refer refer directly to comparable information releases measures the on for the financial this Investor Relations call website reconciliation these our with a Please press the factors, discussed please most fedex.com to the on SEC. at

Marketing President Information CIO; Officer; the Carter, Fred Communications and quarter. Graf, Officer share Corporation. VP, and Smith now call Executive Mark General Rob Chief will today are Counsel and FedEx views Operating Executive and Executive Joining VP Allen, Smith, Alan CFO; his Fred Dave the FedEx VP, Subramaniam, on and us Bronczek, Executive Chairman; And Raj Services on VP Secretary; and Chief

for paying in is XXX,XXX-plus during call. and around holiday off speed another members all. peak outstanding the Season's world simply will of in in record-setting automated FedEx make Welcome greetings increased our think FedEx are FedEx Thank We XX% Purple to Ground, facility, season, to you, and "I to long-term automation salute an we team our midst experience outstanding speed. greatly the advantage service Mickey. capacity our year-round. investments it's of and which particularly appreciate states, to advanced service outstanding." dedication through every Promise, packages their At and translating efficiency and I moved notable,

record levels. During this holiday service is at season,

were year-over-year What's despite at the the up XXXX ever earlier the Express with full expanded FedEx second hub in have hubs XX% FedEx of Yesterday it will Both being FedEx difficult delivered packages FedEx were day fall, Carolina history ground our year-over-year Just anticipate largest opened This the Ground share Office. despite per network. X X more? quarter and been than increase recently year of economic share and major yesterday, we as earnings full earnings per in Ground Ground adjusted we adjusted North Pennsylvania fiscal operations shipping busiest and was conditions. XX% days of scheduled one global in company. Allentown, being the busiest day well.

experiencing our strong the the volumes revenues FedEx demonstrate, and is economy where solid. As remains growth U.S. in

in talked in business, especially with earnings during international our significantly last Europe, September. weakened call However, our since you we

part economy in addition, weakened has disputes. due to In China's trade

given actions macroeconomic lowered we earnings of As our reduce are and trends. global costs uncertainty a the to result, guidance fiscal XXXX have accelerating

end VBO opportunities to X going in goal the its of allow speed largest this FedEx' the will members that we predictive will forward. a important cloud, our One, positions accounting in FedEx tools our team announced of end new are Information the not strategic the confident employee business. third, not new And will the legal Once need acquisition security, so with mainframe in productivity will and we VBO our is for integration IT FedEx we same productivity earnings multi-year XXXX staff of highly FedEx began as will profit have automation are Voluntary Express, us that we achieve XXXX. concluded, system Systems the the improving renewal, enhancing end-stages, the today our TNT release in operations. at retired. addresses now number from dramatically the transition technologies to improvement are flexibility, vastly applications renewal and systems consistent will TNT staff believe fiscal of FedEx IT such legacy of for rationale options cetera, provide of Systems, fewer buyout approaching positions is benefits We AI, with issues. expected with achieve transitions be Massive of reliability, into journey. career which The into nearing one company and will bots, People-Service-Profit many operate customers and we although project with are This analytics of et while legacy the value, is to provide our integration number to second history our being program, modernization FedEx rapidly retired. reduced philosophy

next from Dave. XX to $XXX payback. approximately will our Raj Nevertheless, management several month expect growth. per savings over economic cost the million to assuming U.S. $XXX will to an achieve of VBO annual cost. years, targeted Of an tooth-to-tail is course, further and the VBO following moderate year, our help discuss providing Alan again, to XX overall we increase FedEx employment improve million strategy comments

we that results. manage do however, for add, quarterly FedEx me not solely Let

for as the are next operations. currently quarter speak, planning also we of we Services fact, FedEx century In

the me his FedEx in contributions as retirement and XX Let President are expertise service, him of thank this vision remarkable global Express years most portfolio. as which Express. for the well more He succeed business CEO David. of brings a David to valuable and part after manage Cunningham Subramaniam, a of and than wish position, veteran XX-year recently we as Raj of FedEx will critical

as of and who during know, with Raj don't our one career. those Carere, will served Raj presidents me Chief FedEx add, who our as Brie years Executive Vice regional XX and Marketing you President company to Raj? than Corporation. his long Officer succeed Let more has of Communications of

Fred, good afternoon, and you, Thank everyone.

growth consumer U.S., Let growth economic these growth behind tensions. in exacerbated growth from positive, me U.K. where peak Leading slower slowed Spillover by favorable in X.X% QX. just been XXXX, X% but trade a effects industrial QX economic year Asia. has fading have year thoughts given by outlook. in Asia slowed has giving and XXXX this strength to from for appears our us. growth in the the indicators throughout X.X% the remains tech spending in sharply to Chinese QX X.X% economic to trade in under Emerging last in since even driven slowed In World sector. on begin trade growth stand near negatively cycle solid, economy the by The has the slowed July. term. XXXX. secular point X.X% from tensions in slowdown and to growth economic X% second Internationally, way compared Eurozone you impacted The robust we half slowdown. earlier in now conditions to global to has be seen on the of to

our volume and and composite X.X% announced is performance. each been rational. at We recently shipments holistically have yields but We domestic manage of for to Ground turning segment grow working Express FedEx environment Now yields including fuel. we FedEx X.X% revenue, competitive, XXXX FedEx The and and Freight. to transportation for base surcharges, pricing GRI

per extend to cutoff address into with Extra to process. markets X-day continental late evening and announcement with depending Express next-day fulfill time delivery by local including Retailers e-commerce orders shipping Extra enables in the order are As recently delivery with the some and for Hours Hours, Best FedEx fulfillment customers, evening receive The options retailers we United Buy across FedEx service by and expanding the X order X that hours, participating our as States. midnight AutoZone pickups yesterday, as to any multiple select in their FedEx e-commerce with current can United late launched on States. retailers

business, locations the are a we customers Once experiencing one their X,XXX season. businesses to for that's of thousands Further, locations to not of part peak to well of hold season than very and doing a in network. support expanded so also Thanks more applied at we on FedEx holiday extensive to date, outstanding many Onsite and fiscal visibility small- more locations. who to members XX,XXX. Walgreens indication over delivers yet in of and customers upcoming hold are for our to small enjoying grow In X,XXX customers Enrollments alone, have packages once already total retail another continues record e-commerce This and needs redirect Christmas reasons for than allow unparalleled become will surcharge. anyone XX% every Walgreens alert will that FedEx but and we year their done FedEx. invest owned again, than are it, as have of and segment. day Rite this drive extending medium-sized available FedEx shipments. continue not grown encouraging medium clear them control Manager. to convenient the grace, residential we we e-commerce network, FedEx only millions and Delivery want to not to the our have a of our As vast And more Aid for of again, during the to these we October to continues peak register the them pickup the And be team are just deliveries, major bringing locations saving majority Day customer secure who business.

were peak history levels. of extremely this We with last that home I of able this million double The XXX,XXX our that, in crossed and to the holiday to opportunity We the given members season, volume. the thank where team to daily deliver that record all season. stretch more of are XX more around going volume volumes. With levels service busiest the beyond than like achieved days average would X take who were above of the to Monday especially than FedEx, packages, are in our deliver Mondays this of proud the some we Cyber increase including excellent volume world service

over Let Dave? Dave me now turn for call remarks. his to the

everyone. Okay. afternoon Raj, Thank good you, and to

our challenges, already revenue driven, pleased world, our have due performance international thank We where peak team our are of as the members to with in second and the FedEx to by middle season. on economic primarily peak worsened focused My course, Express weakness. trends today, comments of Fred international quarter, here around especially service are in the Raj mentioned. I'd all like very of all

is because While it revenue the of rate overall global mentioned. just the was economic international we still Raj growing, expected growing not that at uncertainty

was of France. of Also, and Germany, our Some I Eurozone Italy just are continues in on of Netherlands, largest That protest third there for now France, impacting with actions two The GDP vest growth. the Kingdom their calendar a and weakness. course, overall weeks saw inspiring and economies Europe unrest the escalate Belgium, uncertainty experiencing Germany, yellow example, business. issue. international United with all spread contract ago, of quarter. quarter-over-quarter Brexit in in the drag the The in is their to similar remains throughout

on course, Following our we of more seen an our TNT's attack, to recovery product accelerated freight pressure mix from shift have of costs. parcel, than system, our and the putting cyber

uncertainty Continued impacting are well. and there and Asia as concerns business our tariff trade in

our We chains. supply work to customers continue as their reevaluate they with

As economy solid, growth you strong seeing are Express just remains and U.S. heard from in Raj, deferred the package volume. we

throughout are swing activities full continue America. Latin and integration Asia TNT Europe, Our in and throughout

enhance we with full integrated the has completed Following XX% of of the to end force attack, our by to and daily accelerated are forward systems a cyber our our to us force business. single accelerated global customers, we infrastructure fiscal investments This looking to. our date, IT Further, be remainder something sales year. year they protect much we run and to strengthen the at very contact integration use systems point the sales provide the approximately and in of for and will X this our of been

in keeping of our are time smaller our stations global very countries on integration of and continues all business. have the of more size focus serve the primarily integrating been of is the combined been complex, that The later same our be to we to Said to in countries to benefits XX% efforts, are The date but The while the markets integrating represent the center of at weighted X of work and complexities benefits network the completion much we deliver we've these that at larger, remaining the our important, the volumes. integrated. customers integration businesses. Our markets relative are indeed is most integration of focused have of the the our differently, limited markets. due direct synergy stages volumes given on their approximately

IT Our on businesses are solutions dependent integration. for heavily the

require corresponding and multiple example, our platforms, customer For these our fedex.com services customer automation of then harmonizations course, redesign of our of tools. and including,

long Our original integration build lead the would accordingly, of solutions the these planning contemplated of end occur these required and integration. the time benefits IT to towards the efforts

growth. be the the in changes mix efficiencies, and revenue network, and now, long-term realization of in Graf volume turn to timing remain of I'll course, revenue delivery combination the our it single over benefits, single confident have our air value the softness give road details. back-office and the a to of and and in to of mainly through While more impacted Alan realized And synergies financial network, we pickup

Dave, afternoon, good you, Thank everyone. and

As business Dave a Europe. conditions just last and especially outlined, weakness release, earnings in mix, since Express service in change in experienced our significant

Economy airline our below hiring Priority first trends second address business shifts volumes include pounds volumes operating increased staff we and deferred cost-reduction while voluntary and the half U.S. 'XX. initiatives, both and accelerated U.S., International and buyout and To Priority and X%, pounds fiscal the program, were while our functions in year up spending. freight capacity X%. quarter, International International significantly during reductions implementing X%, are in discretionary internationally. international a package overnight business several plan network, the conditions, increased in was the accelerating flat up freight volumes These the reductions in In quarter volume volumes initiatives For limited Economy were employee XX%. package in the XX%. These Express profit were surged of primarily International

operating we productivity of programs, technology our scale Ground cost positive addition share market our associated reductions, X% to operations will as operating continue margin productivity hubs will had surged use our $XXX upfront We FedEx basis segment including pressures, In to income both with available efficiencies opening improve to initiatives, Europe gain a an of increase two as Ground results The major our increase. coupled on X% volume on the capitalizing points inflationary increase these profitability XX.X%. to the and in expanding at through XX% XX come network in various costs investment and yield million Ground's and market-leading cost from and Ground's automation, Ground. integrate we and through Freight. online. Despite large increased with

Operating and expected with and cash Freight our projects grew flows increase X.X%, continued increase segment at provide are X%. improve operating corporate XXX our We earnings basis XX% strategic to Ground and income yields and combined long-term points. up the Cost-reduction initiatives, profit the will growth shipments in Ground margins, improvements detail competitiveness. on in more months. Freight X% increasing with margin coming up was

have Cost buyout with expected in recognized and employees. this year million in of FY remainder million in total adjusted voluntary guidance 'XX projecting of to Regarding 'XX. $XX.XX million to estimated at to providing and for savings to margin $XXX down Europe. will primarily per growth 'XX $XXX FY $XXX U.S. we no to in FY Voluntary outlook, due will and Express, shift longer We're in guidance to $XXX fiscal 'XX. of 'XX. be $XX.XX. year earnings operating be our is share, offered service for the buyout primarily million eligible conditions program a This business $XX.XX This fiscal $XX.XX from to are diluted revenue will mix lower are

We similar are opportunities. also reviewing international

tax of effective adjustments. plans, forecasting XX% FY are retirement for before We to rate XX% 'XX accounting mark-to-market year-end

reduced reevaluating Our count. which fiscal forward. our capital share our during has our $X.X nearly We billion spending of remains forecast year, billion first are of $X.X year-over-year this we and going shares the capital repurchased half

As including reviewing additional will financial aspects shares plans, our year. I whether mentioned, repurchase we of we are this all

in X.X spent years, the in nearly million we $XX.X almost outstanding shares. over XX% shares resulting XX reminder, a last the As purchasing billion, reduction

our will and will include the workforces to largest of execute and which remainder the integration on the and XXXX, largest Express integrating TNT During we continue focused most complex plans be facilities. countries,

including Express the to TNT $X.X continue at to expect integration through incur We during aggregate costs charges to program restructuring XXXX. be these approximately million approximately expense, $XXX expect and XXXX billion of

employee may any and in the of capital any on XXXX. continue The integration of period program, including activities, based future expenses buyout international of we we the integration incur completion may the change of to execute investments TNT. timing However, and voluntary additional cost timing amount integration integration as after

We that change pace were caused the anticipated economic by benefits company of realize attack. at acquired, in moderate base mix cyber when due service a to the second reductions business in increasing the the expect although following more a levels NotPetya during the and quarter TNT was acquisition to weakness

a we 'XX. goal for realized As will of the operating be to fiscal improvement not expect in Express billion 'XX $X.X $X.X now profit billion result, year FY over

a Before $X.X to in the improvement to there will and when colleagues your much my $X.X questions, Express have position expect an we and to on I'm reasons updated I we At achieve for FY achieve this we that it great of address I begin how stage, recognize to profit 'XX. interest billion the billion give not is mentioned. in forecast

on flow 'XX, no moderate further cash our a international these and that FY operating domestic economic when see in the in Like working confident FY have experienced, progress goals. conditions. weakening U.S. margins rapid versus and I'm economic we assuming that will we My report growth We improved earnings, give perspective 'XX plans I further and changes we towards hope results. are actions directional QX is enable intensely to can

Now Fred questions. over we'll your turn the call for to

prior in was Thank the some up. Alan. We've came came XX-Q the you, and mix a got after that questions put of then to in that call

So try I'll X to go back and the to forth be fair between here.

take. So question, which first I'll

in competitive allow threats competitive believe major Over Broughton are see do at place many X competitive any over and divisions Express, however no that years share XX Ground to the comes have the see Alan? biggest addressable the existential will in the what to to years, enormous have Donald given Donald, mentioned each any of market cash available Stephens. or or to certainly have large and the and now taken think don't improve FedEx. right flows. phase Freight? last margin and to division, This of margins expand opportunities we next behind it strategies continue, came market and Capital. we expanded the from We Jack X threats of Atkins us from on to Ground and This margins in Broughton grow you. about just in Is segment of question with consistent moving a to X that Ground considerations quarters forward. X of the and Alan basis to our out heavy FedEx investment profitability this expanding we

Jack. you, Thank

network. technology, much have of will that, Ground's at in a you how more margins up. where our become on are not make percentage, to in basis my compared is continued the been, improvement Ground we very density, remarks we particular, next with the at and just excited going improving efficiently, we sweat has opportunity per now will that about I costs talked otherwise to helped I I'm believe, Ground and in which drive opening say, heading. I use that would to and to to of continue operating has about reducing think Ground much have a We'll but the assets nice that terms Ground I better clip the build a there what we're in and would competitive its going are we would help the years. technology densities scale X a months several they package I give say have and say scale in more ahead, also us us you is improve about margins to over things, is in Ground tell where more as

to share take packages of price ask but wait Dave? TNT a is and for European improving be the Bert so Europe we revenue complete gain Here President FDX from premium that in of UBS. and to volume FedEx to need cut the FedEx hear attract can network focus Dave FedEx it question this before to Does integration happens the and question, on into Wadewitz to it quality part over it network? Tom have in they will order is first What needs FedEx to Does for growth its here in the horse's Europe? Europe packages Dave you can the just So the to going him network? and to Bronczek of back Nappier, so this speak. mouth of afternoon, I'm turn from strategy

continue Okay. there. Thanks, just comments, to course, team was Fred. Thanks, management Tom over for your I the talking question. we and mentioned my grow. in Europe as And in to I of

to their of we continue service. that very proposition for their grow, hoping for company not of the business, with has in slowing growth, very tremendous reality and we all value growing part had course, of parcel volume specialty the weaker The nicely, bought is just not we're and That of course, when that is, freight but the products TNT grow they rate strong a to that, or our that economy shy that and We is affected actually growth. however, of were at Europe.

it focus Bert. And turn that's our to so for over us, and I'll

Thanks, Dave.

the really noted, our on quality in Express focused is house. Dave Europe the of parcel side As of improvement the revenue

and down to volume hub very very been parcels, we our strong comes customers up Liege a value our We're able has on and in think back Dave grow to proposition, We've growing key We're network. in in growing headwind deferred what our really part when you our air competitive. investments is value We in but a been going a that speeding European do have road combine of outlined. business and volume that, network. with are making focused is that nicely. applications as strategy we economy Paris to and very really The freight proposition we're got

With need the capabilities see to in you'll the that halfway we grow business, we're through as continue the there to about semi-integrated and integrate, we future.

we're and it So be with we'll better the is doing where only integration as go we what do we forward. can

This seen Okay. a of Have Amazon Raj? question is from from Merrill Ken Lynch. you impact any Hoexter Air,

short Ken, question that the answer to no. is

you On press contrary, from business. our numbers do volume release, see significant our for seeing the speak as parcel growth can themselves U.S. as domestic are we our across

short just I'll this is Thompson Davis. from So a long-term strategy for Campbell take what From of counter FedEx' me. and to David perspective, Amazon? competition

question. I'm not that, be this the really them customer at competitor in We of think doubtful Amazon ours. many that they're will wonderful good as and I we You answer company at is reasons. see how case. for in sure look don't a as mean, a a it know, We peer service to point this time

want over the particularly not So have share, to some strategies, that can by that number markets time management attack in deal as And that we've said the team, addressable and we've are grown well for to and we over growing. very with reasons time. market there we've understood again, strong we a have of to the change from grow, chosen sectors been sectors we

don't I say can know other than I just what So said. what I

"disrupted," to is be previous going statement over a fantastical. just I to occurs company and think is the again, over quote which prospects this of

financial and could you on initiative Does at X-day our comment Raj, it leave the any this that. I'll with prescription impacts? require are So investments? What delivery? new Walgreens

Okay. which really service locations. at Walgreens, Express, launch nationwide delivery Walgreens sure. Walgreens Yes, as know, next-day month, with a prescription announced the for this is Earlier available of we you

the current Walgreens possible. out makes stores, now our regarding existing deliveries of those making we our Extra the fact investment, operational pickup, question the alliance will which station allows executed Service Now simply be our and that by flows and same Hour leveraging the in Onsite on prescription retail are FedEx with

for one a of example customer the to -- in more we're So cost-effective we this very increasing me service one our of manner. really customers. let how convenience, is this committed experience all add, expanding And offering are doing and enhancing very,

hadn't two an if a of I Wadewitz hope given I have, analyst. I here. hell Tom questions he's But

next about he XQ the of expense likely the Is several quarters, much FY remain 'XX was So unusual? the elevated How to Express expense. wants to know expense maintenance Alan? maintenance in maintenance for

here issues try had was some I'll you and a this we in to big you're an into you from time and first it a the ours, business, strategic to because you issues in like help Tom, have turn have out anomaly this When first timing question, in fleet time the half. timing half.

standpoint. integral continue new from cost. replace how Second a the to question. not half, an maintenance standpoint, strategic to we're pace, We're old to our well, The the aircraft almost do but with the absolutely new our been that's hold is has that. we but that, of do versus planes our comparisons not will to used cost continuing year-over-year, of having flat question unbelievable, but be with The strategic able checking to and part said aspects reliability are just from it's planes continuing a

a reliability in doing job. these have difference division ops big aircraft new making out a Our through who here is It's to fantastic the have peak dispatch roof.

from cost over the of to a down our newness time factor. packages standpoint, going to because on our So go is revenues strategic the relatively maintenance

are into changes there express? priorities of was Raj you the what step -- Raj, role, your immediate new So for of are some let just Jack Atkins to me expect it, for his a read the as what first about to bring from you Stephens. your here question And seat?

my to integration this we all first customers value where the you and in the across very said a Jack, new focused look to profitable question. manner. very forward the positive thank Having and growth board for have the role focus to our we that thrilled of in for in some and focused are Europe. we're with and is creating on on Obviously, be Europe, excited express that, change of really priority on continuing

you by express the on the you from factors answer Is phone, the affecting yield got at up we As long Wetherbee's deterioration or other why in driven Citi, changes yield? Northeast. way there Christian question are international as TNT don't Raj, missed

yields impacted key by mix, the international exchange are those product to the Chris, Well, extent, some negatively region mix rates factors. and are and,

from Ross going I to question it's pretty I'm would to clear. give a here's answer Raj because normally David but is take which or the of Bronczek, Stifel, Dave -- it So

changes, So facilities? taking Express number kill is -- come the is where reductions, competitively got answer to or to and and involve going I the size it big so take because you networks to if and down. to our question, these the Will tell we are it networks capacity Obviously, you've international can Does are can't do, that up recognize have our of be For to Europe Pacific sensitive. our flights our regarding you the capacity told Asia and our are and they or what Asia this of Europe would anything, we would temporary? permanent network extensive, place? David, we so but and we're Asia competitors be to

wants Dave to in aside, kidding here. jump all So

don't So tell him.

quick go the down. lets and in I I the tell on that, some us Purple flexibility fleet so on No, many that there's that, have over the flying mean, would We and our put not you would we'd like obviously, true go certainly tails. now our and I the flexible, but it's cost, of good consolidated. won't. we've network are up tails, can past, global us up a and lets down. that said our be of global examples networks our go I world eliminate Purple right our And we and -- so times big all it that's can this some traffic example

throttle How billion Allison budget, to have Landry Alan? flexibility back much Suisse. Crédit of So you $X.X to CapEx

had We everything. and of lot regarding a CapEx questions airplanes and

So awful thank the we're later, reason lot it terms is to of still you you a we're is, would my I information mean, and point one the things packages. that in have into you try the to Allison. growing And just in and I that an for pounds question, we're I'll in and looking and press call you -- everything. out I out. still things found overview answer, it all could at carrying of there's and but obviously, release gave consolidate gave I

a we're that off and lot yields is our macro. of So on

don't we're could are ability, Dave we forward. going to So we the Fred mentioned, down it. company if but still as we we meltdown. I grow some to -- real certainly that happen, to do think and flex have going both going don't I this have think have We big

order book things to aircraft, our our planned and and got at we're hubs, CapEx, need and we have big projects and the as And far underway, and we for vital are Fred the for but expansions And technology as long-term. Indianapolis of mentioned, an on the some next that comes that, reliability the those As with looking those planning years. and comes the us. technology acquisitions that Memphis we've the we're XX airplanes

happens. down the balancing But going little to act. need be this we've bit place. some got to it's still with the in majority forward day, the at that will of to what a We of a see probably So programs things move the we It's slow end tougher year.

question volunteer it overseas a for in Bronczek is You Mark Europe lived to add harder many from because take Canada. U.S. maybe then and this wants outside these in it Klaskow and Is Dave, and Dave have Lee of years give I'm something to to it it he of as employees going to buyout culturally So Intelligence. Bloomberg to the to well. for programs?

career, of offshore half they I've same with they and a No, want the to grow there here. been want opportunity, frankly, diversity, They the Fred, chance company. people are want the it's over not. quite people as And my

want people is, if hand, of move philosophy. voluntarily philosophy other And have can people our buyout, they voluntary forward a the our they it. you part do On to

than to I in is, that. think their a was comments, that in the it's received. global beyond and buyout. going Europe mention didn't be This of that, course, And part Alan course, looking well it at we voluntary but around it of and the are This to world. Fred part this of planned all much originally more is TNT it's the is integration.

that much. So our is employees that I like company's culture of it actually very think, part culture, our our

the network. from So Wadewitz is air from about UBS there question Tom another

to with Purple underbelly. service-sensitive so that percentage on we is that, the Amazon works, flexibility the the Topics. flight service. in the That's system our until the I to more questions concerns think at up have to carriers And our into it is What provides build FedEx moved it's give one the scheduled, obviously, tail have don't it Transport on further go business, say, it. regarding less another that it put There about Kentucky, International lots network put couple recent yielding because Air, best competitive Amazon way by enough it unmatched we lower density to of the the either network. details does the about Suffice Alliance other planes option on or Airport, our not interest. a Rockford Air in Raj? Ronan and in there We interest moved Purple Northern -- of that but of answered detail put we've from to want in expansion tails on are Dan and

Dan, concerns. we about have talked don't we've as any Well, before,

And so domestic Amazon you. are our volumes value to see, customer can ours. you far a of Thank as networks and the we as continuing increase, good in

place. recognize, significant and is and also think SKUs inventory which stock forward Amazon again, third-party in up a big, items the there can't customers, it's stocked inventory who every to not misunderstanding, move low-turn I Amazon network duplicate it their moves the and set important It's Air prodigious. to system, for within is is

FedEx So of David system. differently Vernon of came than it's very or that Bernstein. from There a scheduled good UPS's out analysis this is

recommend volumes take flat. to there in came International people were Scott were I Group mean, let's that Research. that. Wolfe see, -- the are some that international interested of X% read The in of So was and questions that I'd earlier. year-over-year -- up yields

seem Do off. wants or it it think with the but Alan driven? and I think pricing this issue are about issues then can and volumes, company-specific mix you top Dave macro related TNT bad be one an mix. bad of didn't to to So to say something

the go did their we FedEx, the my to well really of question I'll start. do and is things with no that that There that is comments the made product. TNT continue -- mentioned well, very I freight and one fact TNT specialty freight about ahead inside product and in

that came cyberattack because after better we So booming is product than no product. the one back are in that

bit well. So little a that product, as cost structure parcels a has different bit course, different our it. We're of to focusing on mix, little

fast we are just they're still growing questioner As somewhat, what would on volumes growing. out, the dealing parcel and pointed focused being still like to growing, grow. still that. depressed as we're the not out, freight them the we're you pointed point, as with and our And with we're that's economy But

And we on the of as and on past. This in head promoting -- change, one -- he this will. at express now I yields more this to did great this came so a us P&L, fast than guy whole things mix adjust we our the came Alan. And fast a see about about us can pricing lot and cares he

breed be the he's that mix to that right. make we get I'm sure on going So to sure back

I I more some problem. tell affected traditional that more mean, in XXXX. it's have things can't a precise U.S. that share. and underway We've We'll in sorry, earlier have this for you calendar mix business think, in the in as to acquiesce. GXX does on Summit has hard a It's been we'll but difficult higher growth say or volume in creating it this pallet follow the during June. particularly the area March following a talks particularly in issue. your the by aggressive bear pallet the Yes. Raj? meaningful first But following international the more market lot we growing improvement Lunar of February-March some some New volume I environment been If we the about earnings our customers' and it companies to year. for to and where this of But half Year. success areas got month in produced a the know weak be the I attacking that, so-called during freight China XXXX conclusion the about people degree, interesting and on it's of that expectations that's the tensed quarterly am macroeconomic we've the is between guidance created any been issues the basis more business. of calendar updated assume XXXX, not, in to

call. we that update New at we're we'll this in what and we into quarterly know, point, that given And -- guess. you the our seeing that our assuming Again, what continues we changes, if know, as are softness current Year, you next that's the

So got materially pricing is as private affect office at pricing in increase carriers needed power? Raj, post you of bat, as long we to what magnitude

in the just I on the don't I want in of the comment to will cost pricing previous of that broad that to the point conference particularly delivery years up come. decisions calls will go carriers. other continue Mile to made we reiterate have Last

to misrepresent UPS add It's of to which them injection counting the a and for SmartPost, that. industry just given me of direct this pique of postal FedEx packages, the injection. mine. something by observers Amazon of continued SurePost many Let particular total to the double Many package are by market Direct

since items only be be delivery that has It for of could is Select in placed originally Parcel that could and if a back so-called in you place XXXX. in And service, the So the jeep mailbox, go designed vehicles. been put one which research right-hand was that it.

packages the Service. And dynamics Of that. service Postal which large, created has inside postal the e-commerce course, expanded own the has set have grown, has gotten this as of

and these Postal the is going SurePost. peak, peak, times, a many for while many going handle these and Service packages FedEx to for for is is lot handle to UPS So many postal peak, actually packages handle packages to this SmartPost going the you'll see packages of FedEx many FedEx are

that's UPS you service, kraft though I priority get Postal for packaging, the to moved -- the product end-to-end year or service the or something a small package pricing case, ago, more are is vitamins a me, not course, prescription like not now the of over that's noncompetitive in postal the was freedom. was and/or into drugs it that Now my like the product pardon, which case as package small previously first-class give introduced recall, SurePost, was Those competitive that. mail, sector cosmetics regulated or Service a excuse which sector

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a Keith declined when Schoonmaker Bronczek, a Dave win did accept brief business to of Morningstar? any recently, LTL for competitor So period FedEx shipments

can outstanding me look question some we always our competitors we case, this difficulty, just network In we customer capacity. we extra service. the could that of how answer in if when we it provide one terms of have the moved because in handle saying our did, Let by having we knew and we was

about deferred shipping, with concern is our that customers, able shipping, make our business there broad our course, to we've been keeping customers future. okay answered. And inside want that to softening news to just us, So talking our We've portfolio go possibilities to different FedEx to take number raised. part point, that for potentially that. the handling so China about a to have weakness, is business. for such FedEx ocean, earlier customers. to Raj has of job between true with possibilities our did in team Fred. extra express, us back, of been of customers our question if a good great a It we I you freight a array our our talk I is been China any do out of it's that talking of wanted of that In did are case, There that about daily that between we the the the Fred,

Excellent.

solidifying go is me to service position are your somewhere in And there Europe, else, question to Broughton Capital. Donald back plans of TNT Let Broughton in next expand from to Raj speak this. to or the offerings With opportunity Asia ask Raj? this great I'll

Broughton, Donald lot Europe. a Dave talked about has Well,

with ground this of FedEx's in fantastic in unmatched network Latin now outside those Middle networks we intercontinental but when a -- these And our point manner. to including cost-effective international segments, have offerings, allows in has Asia Asia, out. unique we as well combine service and to us networks very, So East, to value allows very you TNT now offer America. a Europe, expand in to you are very that new target And multiple large air market system, us positioned customers

the largest the instance, cargo Europe. in to air world is Asia lane For

the just we well talked we market win in capabilities that positioned With I this just to segment talked about, that now are extremely about.

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we strategic even can larger a low-growth grow have, plans a as and have earlier, in can think attack So addressable environment FedEx said express we where market we I now.

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for politics, America, bottom-up often is of mercantilism and now tremendous business I that I'll the I class. travel to this trade. for mismanaged, dealing induced is are that had issues bottom-up political saying, parts commerce the dependent an the of, changing today right corrupt you so just Africa patriarchal wanting human tremendously the and mean, we're making profundity new enterprise bad completely but been as middle in in creating state we in time and basis have of create the political tax, This the the that in beings on unilaterally. on with situation has United are people by like or by that today choices. end, with think important. And in instance, about the difficult immemorial type for are Latin ongoing the This of demand it crisis will, been and China, just tariffs owned which And ecosphere immigration initiatives of the most decision a in in very, States a Germany, very put bad the conclude Brexit, the not politically

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trade will think to we fundamentally, grow. So continue

the have January. Pacific here a We lot of question across advance of the place No took Xst stocking. question, in stocking about of

here on China the manufacturing quarter silent effects mentioned, submarine. is rig powerhouse. that I running so, I we're the of think And that. think will for some But as a first Alan see ripple We mean,

Just show looking that fantastic this Street of today's groups that. Wall Journal, charts

right growth think political it will hopefully, trade and the folks will I get So resume.

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from the question about share some cyberattack. on is the Helane Here market TNT

I adequately, -- did more. think no? Any that covered we

right. All Okay.

talk was forward, X the Fowler, bit respond BXC do dynamics you've prepared So these adequate large to BXB shifts X you, about to Raj, the you for and past in the years? I a shipping business over feel how Todd patterns structural hope Helane. KeyBanc? that observed to is And going

Thanks, Todd.

location. is want in Xx and that, our years, by driven last just for here for customers. our lot us reliably transactions. others create our And to And to more we we XX-plus infrastructure in our calendar that of offerings and quarter over Xx innovation core e-commerce, integral existing companies retail. of customers. than that on FedEx place grew to the like us to drives year-over-year all business like our should continue strong said of we put And the FedEx XX% U.S. Extra market in that the I have, infrastructure, to new XX.X% even enhance miles and hold to and And U.S., The that proposition in they And FedEx is the foundation value now FedEx grow SmartPost pace Home services building first be Delivery, more very continues that stand we very, BXB stead are thing it we roughly X good FedEx of you our our population roughly it our infrastructure that Hours, on. mention of a to e-commerce sales noted e-commerce as retail traditional leverage be are so again, as serve value this for and the launch within instance, is Fulfillment, should to quarter, having know, XX% noted XXXX, as

also on a with first combine the we focus lot making solutions, Delivery the but miles. the digital are leveraging space how a a mile, few CrossBorder FedEx once of with we you forget basis, global which progress last thousand see earlier. or CrossBorder as e-commerce on unparalleled in are great are becoming again, When the the network. fast-growing quickly front network our don't core I our you FedEx mentioned well. Also is Manager, on can There We force

to China value Seaport? significant here. in go real out lot Wall was talk the upstream some I manufacturing you a on Street the of Asia and when today's a ago, few quick tariffs, but in weeks Vietnam seen out move Kevin again, in Indonesia, hard the one of Have definitely which, in there they're chain, Thailand of Journal light is other take China very any me is that. to and charts about Let of And show. working Asian countries Sterling Kevin, growth on

markets So it, don't going if move China, people be time. I any it even but be don't to of to think do wanted could and out wholesale there manufacturing over is think I adjust done to

I So see along it just to mentioned that of we do lines you. the

please lower-yielding wants entirely it EPS Sachs what Goldman to to to know, and products? of can attribute is Reustle Matthew So higher you you to growth your XXXX drivers cut, differentiate the macro Alan?

talked we think about bit. quite I this a

for cap it by maybe adjust It reduction and off entirely just entirely fast saying to we're it, it's going back range this came that it's is me Let up. entirely to the year express it macro, the in on revenue. make as

Freight quarter, continuing scale. taking their of the During mentioned, performed second to improve as admirably. advantage They're and are those entities Ground technology I and Both margins.

excited keep what's more to hearing for them. going You're entities ahead X this. for those about Very about

now you call. make but were So want to the exactly between we'll September we we back on and get understood differences the track at happened here, sure and what where

owning percentage is versus about the benefits the lease from What Todd So decision XXX fleet Fowler, please could the Dave discuss Bronczek, KeyBanc. trucks them to expected leasing in electric, preferred? the be of why electric long-term?

Todd, you, Great, Okay. thank for the question.

to and quite for a in vehicles in always Of we're efficiency In of electric. actually worked ways they're whether X% More our our all United we've be and case, Ryder will in the hubs. than this of mitigator for We improve on-the-road frankly. looking Ryder, States more fleet is sustainability hope that. the with it's us, risk or our course, than vehicles,

coming far, the tests very in favorably. So are

the all the fuel far it's us. so be emissions, So good savings, would for for reasons efficiencies, carbon the think, to proving very that I you suspect, the

look is me by add X rationale is, are be this and this California the vehicles. let acquisition pronounce things: manufacturer that They So way to think, I part Chinese the required we name. to of second, one, is Chanje regulations; the terrific. for these that

to all next public become few requires recognize the need You vehicles large, to in by-law heavy China electric years. that

we're around success, the in vehicles the fleet. leader they these so not these much the so market are getting In in So into the world. excited very buses heavier Chanje about but automotive sector, vehicles,

Dave way said, good it was Ryder. and Chanje it us, As do to for a

Let's go of to Jairam from Raj, Daiwa. Nathan

as increases affects the increase long think it you well, levels among automation over term? As leverage players operating across pricing discipline do industry, the how industry

going I in rational remain how future. to to Jairam, to other that it to evolve, that question it's And to than pricing to answer predict hard near expect I'm very best not but say sure but environment rational. how it's -- our the in competitive, be continues the

we've additional you. So Raj deck, on now you me couple -- a out answers of answers got let of squeeze

the within discuss of progress Trade Scott please Schneeberger So Supply FedEx of Chain Networks, Oppenheimer. FedEx

Scott. Thanks,

very progress making in Supply good are FedEx We Chain.

in also on very improve and profitability. business, the and will external growing healthy and a future our also the that's focus the wins time, pipeline our for already, which opportunities. we're customer new both business, At same and offerings in strong with standardizing We of driving and efficiencies the organization have leadership very dividends paying brought a to FedEx the a renewed number

beyond plans to of Sterling same-day here, offering footprint? Do swinging your Raj. keep you Kevin have expand XX-city So current Seaport.

same-day a services, particularly a city in at e-commerce to by It's uniform is markets, X,XXX in XXXX. volume respond very business health of the growth an we increasingly on. rate offer expect and our shippers healthy happy daily as Actually, industries. business are tool manufacturers with continue they it I customers in for in Kevin, used the services is way and diverse the set the offered professionalism of their crucial important growing of we the plays model, suite currently to we U.S. and and that part rate growing. aware, you the as covering XX it to are is an business want cities care, be And so retail,

as any So pressure any in -- increased seeing and the David up? Vernon of competition for Alan? and Is pickup asked, ISPs there delivery? linehaul heats cost between linehaul labor are difference inflation rate

Thanks for David. the question,

to markets that service it and delivery, are pickup me providers, both be affects the business. labor as partners. an for ISPs just other very their great. proud people, due job. say increased Let and to experiencing They it costs our unbelievable linehaul does higher and Certain some are do We're competition any

-- productivity one overcoming negotiated, in the but their some because So my great we agreement as into they're take is many of the they're technology, unique ISP I driving of we have ground, pressures and mentioned that do inflationary factors and consideration. Each opening at and and we remarks, those margins up.

Bronczek, any peak Schneeberger please Oppenheimer. current the dissimilarities are Freight your Scott the versus FedEx environment you period, between prior in describe Dave business similarities, David? So of witnessing

job. Thanks, team John your and Smith done freight Scott, his FedEx have question. a fabulous for

peak is Our right now booming.

X% the total Alan As up almost year-over-year. same, mentioned, is we're Revenue revenue.

when I you be in in up. the the this, that'll -- way service tell volumes, in in say the pounds spite would pounds and daily higher levels with spite a are my that So have never our Express, call President, have my Ground we mad and ever of of been I operating in Freight. in

our from So even strong. very are nonpeak is peak of similarities volumes a there though lot to

here, been we've be. have that questions X given more to the ones So are got

Dave with, Mickey or you've didn't if not get me question, get problems after Raj. any we your Alan or Foster, So or got

far? home the oversized there these X good it sector would of It's incremental market Ossenbeck growth in basically people substantial types JPMorgan. this is the program this would So with on in there just me FedEx service How sortation, Raj is Oversized is and by deliveries and with has X is take a has in this is ask question this. heavy there market years, handle from or doing automated things. be important, to packages say expanded, I a before last hard-to-handle or that FedEx shipped things Ground progressed Brian for the there pilot If been, weigh market. heavy volume? that so by call, some of Ground unique robotics responding the that where understand to over handled Let

more lot a hear it. to going about You're

truck, hear are the business is and hard-to-handle heavy the one, height generally move items movement not this and they require dock about for threshold On play lot you these just items Freight residential, building. require that that and, offering and FedEx over both more dollies liftgate, give as of it a it. Brian, a to into the just Direct, product, FedEx will But of started a the Raj a Freight the state you'll We've office here.

Yes.

Fred segments goods market the to heavy As of the and positive a roughly as fastest-growing it'll hard-to-handle revenue new market entering mentioned represents response we it forward. customer represent here, been quite in the go billion FedEx $XX a for opportunity. market e-commerce us and one the And stream has the is

don't All USPS by or see fully. capacity? Last does answer for the might towards you this this it any about that handle right, call that cleanup shipping question Mile you I do FedEx Raj, X have UPS? is growth didn't anybody day Delivery question day any e-tailers push the on shipping of Jairam we Daiwa. the here How fall Nathan because a want and affecting X on complaints Can

the impact leverage the the we serve. just the the is anybody and in Thanks, answer might Jairam, have infrastructure, knowledge build. for base we the compete can are the technology, but I push cost of extraordinary is question. say do to off but can't capacity, us, our surprise or capabilities, this to no not the only global also quite what that as The to business else, USPS prepared that I for we well

specifically asked quick you on with to launch want day, our comment but e-tailers, orders positive I of is the retailers you very FedEx store compelling retailers. infrastructure value Hours make the about retailers proposition a infrastructure, a regard. combine it step late our Extra clearly this allows Now in When of to traditional also very, logistics for the in and received offer

Quarter FedEx, Earnings questions free Investor additional FedEx you if about in Second team the on thank to any Corporation's have participation Call. anyone call you. Conference you your Feel Relations So, for thank

you Once participation. that your conclude Thank does today. for for again, our conference